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Mandeep Singla Versus State of Punjab And Others

Bail application - Prosecution proceedings - offence punishable under Section 9 and 9AA of Central Excise Act, 1944 - Petitioner was arrested u/s 13 - evasion of customs duty / CVD on import - violation of provisions of conditional exemption notifications. - Held that:- the petitioner was arrested by the Inspector and he was produced before the Learned CJM by an Inspector, namely, Mr. Dhiraj Surangi. The Central Excise Officers have power to arrest under Section 13 of the 1944 Act and after .....

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f bail would be made out. - Learned counsel for the respondent-Department has argued that it is an economic offence and no leniency should be shown. The counsel has ignored the fact that matter is pending for last more 5 years and nothing new had occurred in Jan’2016 which prompted the department to take harsh action of arrest. Further, it is an economic offence where separate Assessment/Adjudication proceedings are going on. It is not a case of mass level cheating, as involved in the cited .....

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. Vishal Garg, Advocate For the Respondent : Mr. Kirat Singh Sidhu, Deputy Advocate General, Punjab Mr. Satya Pal Jain, Sr. Advocate assisted by Mr. Sunish Bindlish, Sr. Standing Counsel, Indirect Taxation JUDGMENT Jaswant Singh, J. CRM No. 15390 of 2016 The petitioner has filed the application for placing on record orders dated 02.12.2013 and 20.10.2014 passed by Customs Excise & Service Tax Appellate Tribunal, and order dated 15.07.2014 passed by a Division Bench of this Hon ble Court as A .....

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learned CJM, Amritsar. 2. The petitioner-Mandeep Singla has been arrested by an Inspector of Central Excise, Amritsar under Section 13 of the Central Excise Act, 1944 (for short 1944 Act ). The petitioner has been arrested for commission of an offence punishable under Section 9 and 9AA of the 1944 Act. The petitioner was arrested on 05.01.2016 and the respondent-Central Excise Department (for short department ) vide application dated 05.01.2016 produced and sought judicial remand from the Learn .....

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e Notice, the duty has been demanded from the said company and penalty under Rule 26 of the Central Excise Rules, 2002 has been proposed against the petitioner. As per show cause notice, M/s Dunar Foods Ltd. has cleared in Domestic Tariff Area (DTA) goods i.e. broken rice, basmati rice (small size), rice bran and basmati rice without payment of duty leviable in terms of proviso to Section 3 of the 1944 Act. 4. The petitioner has raised below mentioned contentions in the bail application as well .....

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y is a 100% Export Oriented Unit (EOU) and selling its products in domestic tariff area. The Company is liable to pay excise duty which is computed as aggregate of customs duty. As per judgment of Hon ble Supreme Court, it is not customs duty which is payable but it is excise duty. (iv) The process carried out by the company is milling of rice from paddy and it does not amount to manufacture, resultantly Section 3 of the Act itself is not invokable. (v) The rate of duty in Chapter 10 of first sc .....

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filed complaint with respect to duty amounting to Rs. 29 crores. (viii) The maximum sentence prescribed for the alleged offence is 7 years so the respondent could be arrested only in the case of reasons and necessity as mandated in Section 41 A of the Cr.P.C. The petitioner has complied with the summons which are even after thought so there was no reason to arrest. (ix) The petitioner was not produced before the learned CJM on 19.01.2016 and 02.02.2016 so judicial remand is bad in the eyes of l .....

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y opposed the bail application. As per the respondent, the company (Dunar Food) is liable to pay customs duty in terms of Section 12 of the Customs Act, 1962. The petitioner was supervising all the affairs of the company so he cannot claim that he is stranger to the company. The amount of the duty involved is as much as more than 170 crores based on sales for other periods even though the petitioner was arrested in respect of the evasion of duty amounting to Rs. 29 crores. The arrest can be made .....

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ord of the case produced during hearing and oral arguments made by the counsel for both the parties. 7. The petitioner was arrested on 05.01.2016 and his statement was recorded. In his statement, he has admitted that he was looking after production and other activities of the company and Managing Director of the Company is his maternal uncle (Mama). The other employees of the companies had also confirmed that they were getting instructions from the petitioner. In these circumstances, it is falla .....

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acted irrespective of permission accorded or not to sell goods in Domestic Tariff Area by Development Commissioner, the competent authority constituted under Foreign Trade (Development and Regulation) Act, 1992 unless goods sold are notified to be duly exempted or within permissible limits. Therefore, all the judgments which are dealing phrase allowed to be sold in India have become meaningless. None of the party has cited any judgment to show that in circumstances like present case, duty is pay .....

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pain. The judicial remand of the petitioner was extended thereafter in his presence and he did not point out this fact at that stage. Now at this stage especially in view of explanation of department, the court does not consider it as plausible ground of bail. 10. Learned counsel for the petitioner has vehemently argued on the question of levy of duty. It is neither desirable nor appropriate for this Court to consider the question of levy or exemption of duty at this stage because as pointed ou .....

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levy of duty on goods manufactured by the EOU and cleared into Domestic Tariff Area. As per proviso to said Section, an EOU is liable to pay excise duty which is equal to aggregate of duties of Customs which would be leviable under Customs Act, 1962 or any other law for the time being in force. Customs duty is levied under Section 12 of the Customs Act, 1962 and apart from customs duty, Additional Customs Duty known as countervailing duty (CVD) relatable to Central Excise duty is levied under S .....

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nd 3(5) of the Customs Tariff Act, 1975 are reproduced for ready reference as under:- Proviso to Section 3(1) of the Central Excise Act, 1944: Provided that the duties of excise which shall be levied and collected on any excisable goods excluding goods produced or manufactured in special economic zones which are produced or manufactured- (i) xxxxxxx (ii) by a hundred per cent export-oriented undertaking and brought to any other place in India, Shall be an amount equal to the aggregated of the du .....

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5 (51 of 1975). Explanation - Where in respect of any such like goods, any duty of customs leviable for the time being in force is leviable at different rates, then, such duty shall for the purposes of this proviso, be deemed to be leviable at the highest of those rates. Explanation -In this proviso,- (i) xxxxxx (ii) hundred per cent export-oriented undertaking means and undertaking which has been approved as a hundred per cent export-oriented undertaking by the Board appointed in this behalf by .....

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rates as may be specified under the Customs Tariff Act, 1975 or any other law for the time being in force, on goods imported into, or exported from, India. Customs Tariff Act, 1975 Section 2. Duties specified in the schedules to be levied. The rates at which duties of customs shall be levied under the Customs Act, 1962 are specified in the First and Second Schedules. Section 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges. (1) Any article which is import .....

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or for human consumption imported into India, the Central Government may, by notification in the Official Gazette, specify the rate of additional duty having regard to the excise duty for the time being leviable on a like alcoholic liquor produced or manufactured in different States or, if a like alcoholic liquor is not produced or manufactured in any State, then, having regard to the excise duty which would be leviable for the time being in different States on the class or description of alcoho .....

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nd where such duty is leviable at different rates, the highest duty. (2), (3) (4) xxxxxxx (5) If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article whether on such article duty is leviable under subsection (1) or, as the case may be, sub-section (3) or not such additional duty as would counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or tr .....

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dded tax, local tax or other charges for the time being in force, which would be leviable on a like article if sold, purchased or transported in India or, if a like article is not so sold, purchased or transported, which would be leviable on the class or description of articles to which the imported article belongs, and where such taxes, or, as the case may be, such charges are leviable at different rates, the highest such tax or, as the case may be, such charge. [Emphasis supplied] 13. Learned .....

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4 Act, only the customs duty leviable under Section 12 of the Customs Act read with entries of CTH 1006 of the First Schedule to Customs Tariff Act, 1975, notifying the rate of duty as 80% and not CVD i.e. duty equal to excise duty. In P-6 at page 75 of the paper-book, custom duty on different products i.e. rice broken (CTH 10064000), rice bran (CTH 23024000), rice basmati (short in length) and rice basmati (CTH 10063020) has been calculated and shown payable whereas no amount of Excise Duty/CVD .....

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ption in terms of Notification No. 23/2003 issued under Section 5-A of the 1944 Act. There is nothing on record to indicate that whether goods had been sold with or without permission of Development Commissioner. There is also nothing on record that whether goods were sold within permissible limits or not, even though counsel for the petitioner has fairly admitted that sale in Domestic Tariff Area (DTA) was more than permissible 50% of the goods exported. It is not disputed that the Company has .....

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ds the claim for admitting the petitioner to bail, it is apt to notice here that company cleared goods during last couple of years and continued to reflected in their records and also filed their returns with the Department, thus, it is not an isolated instance of clearance of goods. The respondent-Department continued to issue Show Cause notices and in respect of prior periods even orders by the adjudicating officer have already been passed. The records are lying in the custody of the Departmen .....

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amount and in such manner as may be prescribed. 15. Apart from above observations, this court finds that the petitioner was arrested by the Inspector and he was produced before the Learned CJM by an Inspector, namely, Mr. Dhiraj Surangi. The Central Excise Officers have power to arrest under Section 13 of the 1944 Act and after arrest, Department is bound to follow procedure prescribed under the said Act. Power to arrest is independent from disposal of person arrested. The procedure of disposal .....

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may with the prior approval of the Commissioner of Central Excise, arrest any person whom he has reason to believe to be liable to punishment under this Act or the rules made thereunder. (19). Disposal of persons arrested Every person arrested under this Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send person so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance to the officer-in-charge of the nearest .....

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lice station may, exercise and is subject to under the Code of Criminal Procedure, 1898 (5 of 1898) when investigating a cognizable case; Provided that- (a) if the Central Excise Officer is of opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person, he shall either admit him to bail to appear before a Magistrate having jurisdiction in the case, or forward him in custody to such Magistrate; (b) if it appears to the Central Excise Officer that there i .....

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trate by an Inspector. It would be appropriate to consider that whether he was empowered to forward the petitioner to custody of the Magistrate. As per the relevant Notification No. 9/99-CE (N.T) dated 10.02.1999/11.05.1999 issued under the 1944 Act concededly governing the issue, only Superintendent can forward arrested person to custody of Magistrate. Based on the said instruction, a similar question has been considered and decided by the Hon ble Jharkhand High Court in the case of Hemant Goya .....

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, if he is of the opinion that there is sufficient evidence or reasonable ground of suspicion he may either admit him to bail or to appear before a Magistrate or forward him in custody to such Magistrate. It can, therefore, be deciphered from a bare reading of sections 19 to 21 of the Act that the Central Excise Officer in order to act in terms of the provisions of Section 19 and 21 has to be empowered to carry out such provisions. 12. In the context of the above, learned counsel for the petitio .....

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her in the counter affidavit or in course of argument and with respect to authorization what has been stated in the counter affidavit is with respect to Section 13 of the Act, which relates to power to arrest and which power was delegated to respondent no. 2 by the Additional Director General of Central Excise, Intelligence, Kolkata Zonal Unit. The power of arrest as envisaged in Section 13 of the Act does not co relate with sections 19 and 21 of the Act. The respondent no. 2 may have been given .....

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